A fall in the number of start-up businesses in the East Midlands, as well as a rise in insolvency activity, indicates a significant economic challenge for local entrepreneurs entering the final quarter of 2023.
This is according to the Midlands branch of national insolvency and restructuring trade body R3 and is based on an analysis of data from business intelligence provider Creditsafe.
R3’s figures show a month-on-month decrease of 5.81% in the number of businesses set up in the East Midlands in September, falling from 2,462 to 2,319, while insolvency-related activity – which includes liquidator and administrator appointments as well as creditors’ meetings – rose by 36.05% over the same period.
R3 reports, however, that business cashflow continues to rally against a challenging economy, with a marginal fall of 0.55% in the number of East Midlands companies with late payments on their books, a downward trend in the region which has continued over the last six months.
R3 Midlands chair Stephen Rome, a director at law firm Thursfields in the region, said: “While this research contains some flickers of positivity for East Midlands companies, the economic backdrop remains vastly unstable, making it very difficult for businesses to forecast the challenges they will be facing next week, let alone next month.
“Monthly corporate insolvency figures are at their highest in many years, with director fatigue and creditor pressure meaning many companies are turning to an insolvency process to help resolve their financial issues.
“While the number of East Midlands companies with late payments on their books continues to fall, the statistic remains high at 23,331. Coupled with rising insolvency figures, it is clear that many organisations, both start-ups and established businesses, are now at a point where they need specialist help to survive.
“R3’s advice to any director who is concerned about the viability of their company is to seek professional help as soon as problems arise, with more potential solutions available to turn the business around. Many R3 members offer a free consultation to those who wish to explore their options.”
